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This study examines how two teacher educators integrated generative AI (ChatGPT, MagicSchool, Diffit, Curipod) into an undergraduate literacy methods course for pre-service teachers. Using narrative inquiry and reflective pedagogy, we explored how GenAI shaped course redesign, supported critical literacy projects, and informed inclusive lesson planning. Findings show that when used with intention and oversight, GenAI served as a creative partner, enhancing differentiation for multilingual learners, sparking pedagogical reflection, and prompting ethical engagement. Student reflections reveal how future teachers envision using AI to advance equity and inclusion. This study contributes to research on digital literacies and teacher education by offering a model for meaningful GenAI integration, one that centers both technological fluency and critical, human-centered pedagogy.